The Nuts and Bolts of
Arkansas Health Care:
Crafting a New System
Joseph W. Thompson, MD, MPH
Arkansas Surgeon General
Director, AR Center for Health Improvement
Healthcare Financing in Transition
• 1928 Penicillin discovered
• 1944 first patient treated
• 1941 WWII Wage controls / Employers’ response
• 1957 Hill Burton Act stimulates hospitals
• 1965 Medicare / Medicaid established
• 1973 Federal HMO Act
• 1990s Employer / Medicaid HMO expansions
• 1997 State Children’s Health Insurance Program
• 2003 Medicare Modernization Act
• 2011 Patient Protection and Affordable Care Act
Changing Cost Allocations for Arkansas
Families’ Annual Insurance Premiums
$14,000
$11,816
$12,000
$11,220
$10,000
$3,085
$8,383
$8,000
66%*
73%
68%
$1,773 28%
71%
$4,000
$8,135
72% $5,969
$2,000
27% $3,967
$3,183 32%
$2,414 29%
$6,355
$6,000
34%*
$9,928
$6,745
$7,849
$4,582
* National average
27% employee
and 73% company
Employee
Company
$0
2000
2004
2006
2008
2010
Source: AHRQ, Medical Expenditure Panel Survey (2000-2010 Tables of private-sector data by firm size and state (Table II.D.1) and II.D.2). Available
at www.meps.ahrq.gov/mepsweb/data_stats/quick_tables_search.jsp?component=2&subcomponent=2.
Arkansas Uninsured By County
(19-64 years of age)
Percent:
20.0 - 22.4
22.5 - 24.9
25.0 - 29.9
30.0 - 34.9
35.0+
U.S. Census Bureau. 2010 health insurance coverage status for counties and states: Interactive tables. Small Area
Health Insurance Estimates Web site. http://www.census.gov/did/www/sahie/data/interactive/. Published 2012.
Accessed January 2, 2013.
Current Health Insurance Distribution
Private Insurance
ARKids First B
Medicaid
ARKids First A
Medicaid
for
Pregnant
Women
Medicaid Disability*
Medicaid—Extremely low-income parents*
Medicare
Currently Uninsured:
~550,000
New Health Insurance Distribution
Private Insurance
Sliding Scale Subsidies
for Private Insurance through the Exchange
ARKids First B
Private Insurance/
Medicaid
Medicaid Expansion
Medicaid
ARKids First A
(~250,000 newly insured)
Medicaid Disability*
Medicaid—Extremely low-income parents*
Medicare
(~150,000-200,000 newly insured)
Overall State Vision
Improving the health of the population
•Enhancing the patient experience of care
•Reducing or controlling the cost of care
Objective
•
Care
delivery
strategies
Population-based
care delivery
Episode-based
care delivery
•Medical
•Acute
Enabling
initiatives
Payment innovation
Homes
•Health Homes
conditions, defined
procedures
Health care workforce development
Consumer engagement and personal responsibility
Health information technology adoption
Expanded coverage for health care services
Arkansas Health System Improvement
Agency Organizational Structure
Governor
Mike Beebe
State Leadership
Governor’s Policy Staff
& Dr. Joe Thompson
State Leadership
Implementation
& Coordination
Implementation
Workgroup
Participation
ACHI
Workforce
Chancellor
Dan Rahn
& Dr. Paul
Halverson
Payment & Quality
Improvement
Mr. John Selig
Health Information
Technology
Mr. Ray Scott
Insurance
Exchange
Commissioner
Jay Bradford
UAMS
ADH & ACHI
Higher Ed
(2- & 4 yr)
Steering Group:
DHS, ADH, BCBS,
QualChoice,
United, ACHI
AFMC
UAMS
DIS
Medicaid
AID (Exchange)
DHS (Mcd
eligibility &
expansion) EBD
8
Goals of Workforce Strategic Planning
 Support the implementation of and transition to
team-based care that is patient-centered,
coordinated, evidence-based, and efficient
 Enhance and increase the use of health
information technology (HIT)
 Increase the supply of and improve the equitable
distribution of primary care providers
 Adopt new financing, payment, and reimbursement
policies and mechanisms
Health Information Technology
 Over 3,000 primary care providers and hospitals
committed to EHRs adoption and have received
nearly $140M(through Feb 2013)
 State Health Alliance for Records Exchange (SHARE)
Currently more than 2,300 secure message users from
about 271 health care locations in Arkansas
 U.S. Department of Commerce Broadband Technology
Opportunities Program ($128M)
Goals
 Reward high quality care and outcomes
 Ensure clinical effectiveness
 Promote early intervention and coordination to
reduce complications and associated costs
 Encourage referral to higher-value downstream
providers
Preliminary working draft; subject to cha
Payers recognize the value of working
together to improve our system, with close
involvement from other stakeholders
Coordinated multi-payer leadership…
▪ Creates consistent incentives and
standardized reporting rules and tools
▪ Enables change in practice patterns
as program applies to many patients
▪ Generates enough scale to justify
investments in new infrastructure
and operational models
▪ Helps motivate patients to play a
larger role in their health and health
care
15
Populations serve require care in three domains
Patient populations
(examples)
Prevention,
screening,
chronic care
Acute and
post-acute
care
Supportive
care
16
Care/payment
models
•Healthy, at-risk
•Chronic, e.g.,
‒ CHF
‒ Diabetes
Patient-centered
medical homes
•Acute medical, e.g.,
‒ CHF
‒ Pneumonia
•Acute procedural, e.g.,
‒ Hip replacement
Focused episodes
•Developmental
disabilities
•Long-term care
•Behavioral health
(mental illness /
substance abuse)
Health homes
Patient Centered
Medical Homes
Why primary care and PCMH?
Most medical costs occur outside of the office of a primary care
physician (PCP) , but PCPs can guide many decisions that impact
those broader costs, improving cost efficiency and care quality
Ancillaries
(e.g., outpatient
imaging, labs)
Specialists
PCP
Community
supports
Patients &
families
Hospitals, ERs
18
Preliminary working draft; subject to cha
Medical Home: Comprehensive Primary Care
Initiative
 69 primary care practices

Receiving FFS + enhanced payments

Improving patient experience: care
coordination, access, communication

Practices responsible for ALL patients

Quality, cost and transformation
milestones will be evaluated
PMPM began October ‘12


Medicare $8-40; risk-adjusted

Medicaid +$3 kids; +$7 adults

Private ~$5

Must meet targets



Quality, performance, transformation
Shared savings model year 2-4
Expansion in Summer 2013
http://innovations.cms.gov/initiatives/Comprehensive-Primary-Care-Initiative/index.html
Preliminary working draft; subject to cha
20
Spending Breakdown for CHF 30-day Episodes
with and without a Readmission
N=4,992 CHF
episodes
$10,569
Avg Total Episode Cost =
$23,511
$6,305
$3,975
24%
$379
% Total
Costs
76%
Index
27%
Readmits
45%
PAC
17%
OPD
2%
$1,453
$832
Physician
6%
Other
4%
$5,936
Avg Total Episode Cost = $9,440
$2,510
Number of
Episodes
$0
% Total
Costs
Index
63%
Readmits
0%
Source: Medicare FFS claims data, 2010
PAC
27%
$288
$337
$368
OPD
3%
Physician
4%
Other
4%
21
Episode Strategies
for Care
PRELIMINARY WORKING DRAFT; SUBJECT TO CHANGE
2012: episode-based payment was launched or 5 episodes,
statewide
Most relevant
payor types
Accountable
provider
Pregnancy and
delivery
•Medicaid*
•Commercial*
Delivering
physician
Eliminating unnecessary inductions,
C-sections, and extended length of
stay in the hospital
ADHD
•Medicaid*
•Commercial
Treating
physician or
psychologist
Matching care to guidelines for
pharmacotherapy vs. counseling
Hip and knee
replacement
•Medicare
•Commercial*
•Medicaid*
Orthopedic
surgeon
Readmission and post-acute stays,
cost of implant
Acute/post-acute
heart failure
•Medicare
•Commercial*
•Medicaid*
Hospital
Encouraging hospitals to extend
reach beyond point of discharge
•Medicaid*
•Commercial
Diagnosing
physician
Eliminating inappropriate use of
antibiotics and radiology
Upper respiratory
infections
* Implemented or in process; others to follow
SOURCE: Arkansas Payment Improvement Initiative
Key sources of value
24
2013: Wave 2 Episodes launch
▪ Wave 2a (April 2013)
▪ Tonsillectomy
▪ Cholecystectomy
▪ Colonoscopy
▪ Oppositional Defiant Disorder (ODD)
▪ Wave 2b to follow (Fall 2013)
▪ PCI & CABG
▪ COPD exacerbation/Asthma exacerbation
▪ Neonatal Care
▪ ODD / ADHD
Preliminary working draft; subject to change
APII scope and pace of rollout
2014
2013
• 50+ episodes,
>40% of spend
2012
• 5 episodes, statewide,
affecting 5-10% of spend
for Medicaid, BCBS
• 69 medical homes for
~10% of Arkansans:
MCaid, MCare, BCBS
• Reports and risk
affecting >2,000
hospitals, physicians,
other professionals
• Multi-payor portal for
providers to enter data
and receive reports
• 15-20 episodes,
>20% of spend
• All primary care medical
homes, >80% of Arkansans
• Pediatric medical homes • Reports and
payment affecting
• Reports and payment
>80% of providers
to >5,000 providers
• Health information
• Multi-payor care model
exchange
for care coordination
• EMR connectivity to multipayor provider portal
Financial goal: 10% reduction in spend
by 2017, followed by sustained reduction in trend*
*Reflects goal publicly communicated by Arkansas Medicaid; similar success case for BCBS
26
Arkansas Health Benefits Exchange
• Arkansas with potential of 450,000 newly
covered lives
• Pursuing Federal-state partnership model
• Opportunity to strengthen competitive
market
• Majority of expansion in rural underserved
areas
• Plans offered by private insurance
companies
New Health Insurance Distribution
Private Insurance
Sliding Scale Subsidies
for Private Insurance through the Exchange
ARKids First B
Private Insurance/
Medicaid
Medicaid Expansion
Medicaid
ARKids First A
(~250,000 newly insured)
Medicaid Disability*
Medicaid—Extremely low-income parents*
Medicare
(~150,000-200,000 newly insured)
Progress on Private Insurance Exchange
• Exchange determines basic benefit package,
plan participation, consumer support
• Arkansas implementing state-federal
partnership model
• Major reforms for health insurance market
• Upcoming steps:
–
–
–
–
–
Finalization of basic benefit package
Private plans submit bids (late Spring)
Outreach and education (Summer)
Enrollment (October 2013)
Coverage (1/1/2014)
Arkansas’s Private Option
• Utilize health insurance exchange to purchase
insurance coverage for those <138% FPL
• Qualified high-silver policies offered to all
• Federal funding via Affordable Care Act
starting January, 2014
• Essential health benefit plan with private
provider payment rates
• Medically frail, dual eligible and children on
Medicaid excluded
• Some existing Medicaid beneficiaries
transitioned
Arkansas’s Private Option
• Plan doubles the size of the state exchange; shrinks share of
Medicaid
• Less disruption in services for people who would move between
Medicaid and private insurance because of change in income
• Reduce size of Medicaid program by transitioning pregnant
women, medically needy, ARHealthNetworks, and others to
Exchange while still ensuring coverage
• Entice more insurance companies to participate in Exchange
• Boost state revenues above original estimate with more federal
dollars flowing into state’s health care system
• Eliminates employer exposure to $25-38M per year in penalties
How does expansion help the state?
• One-time opportunity to strive for complete
coverage and “catch-up” to richer states
through healthcare coverage
• Address unmet healthcare needs of citizens
• Fiscally advantageous
–
–
–
–
–
100% federally funded with opt-out provision
Takes over for existing state patchwork coverage
Relieves state from financing uncompensated care
Assists county and municipal governments
Estimated $1B in new funding stimulates economy
RAND Report: The Economic Impact of the
ACA on Arkansas
• Unbiased, external assessment
• Model of full implementation of ACA
– subsidies toward the purchase of private insurance
through the health insurance exchange
– Medicaid expansion
• Results
– 400,000 newly insured Arkansans
– 2,300 Lives saved annually
– Net increase on state GDP of $550 million annually
– 6,200 jobs created
www.ACHI.net